Revenue recognition
This query is : Resolved
15 September 2016
In the case of an internet company like food panda, where it obtains orders online and supplies food based on tie ups with restaurants, how is the revenue recognised? Typically it receives money from the customer, shares a percentage as income and pays the balance to the restaurants towards food delivered. Should the gross amount be taken as revenue and payment made to restaurants as expenditure? Or the net intake, should be treated as income? Is service tax applicable in this case? if so on the gross amount or net?
16 September 2016
Ideally this case, the commission earned is the income of the company. It is similar to the booking of tickets in the travel agencies. The service tax is required to be charged on the commission amount.
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